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Anheuser-Busch, maker of Budweiser, objects to the liquor privatization bill, saying it hurts the beer industry. The Brewers of Pennsylvania, which represents microbreweries, also opposes the bill, which could be voted on in the state House Thursday.
(Photo by KIRSTY WIGGLESWORTH, The Associated Press, 2010)

Even as the state House of Representatives is poised to vote on a bill to put liquor sales in private hands, the beer industry is fighting the legislation.

Anheuser-Busch and MillerCoors, the two giants of the American beer market, have put their names on a letter objecting to the bill. The letter states that the bill as it stands now is “detrimental to the beer industry.” Combined, Anheuser-Busch and MillerCoors account for three out of every four beers sold nationwide.

The Brewers of Pennsylvania, an advocacy group for Keystone State breweries such as Yuengling, Troegs Brewing Co., and Appalachian Brewing Co., has signed onto the letter and distributed it to lawmakers. The Pennsylvania Beer Alliance, which represents the state's beer distributors, has also signed the letter.

In the letter, the brewers don't spell out objections to the idea of privatization itself. Rather, they say the bill as it stands would hurt the beer industry.

The brewers state that the legislation would hurt beer distributors and tilt sales unfairly to the wine industry. The bill allows for hundreds of additional wine and spirit licenses.

In the letter, the beer industry contends that the bill doesn’t provide a level playing field for beer sales in grocery stores.

Grocery stores would be able to sell unlimited amounts of wine anywhere in the store, the brewers say. Conversely, the bill spells out that beer sales would remain in a restaurant section of the store, and sales of beer would be limited to the maximum equivalent of a case (24 bottles).

The privatization bill “would create approximately 800 new 'Grocery Store' licenses authorizing the sale of unlimited amounts of wine anywhere in a grocery store and, thereby, creating a very uneven playing field in the grocery store segment,” the letter states.

“And because it pertains only to wine, there will be supermarkets where wine will be the exclusive alcohol beverage option and no beer will be sold.”

The Brewers of Pennsylvania, which represents Yuengling and other breweries, objects to the privatization bill as it stands now. CHRIS KNIGHT, The Patriot-News

In addition, the letter states that the bill poses a threat to beer distributors, who may have to devote half their shelf space to wine and spirits. Some distributors say they can’t afford a costly expansion to maintain their current beer selection and add wine and spirits.

Beer distributors sell about two-third of all beer sold in Pennsylvania, so the industry is wary of doing anything to hurt distributors.

Anheuser-Busch, the makers of Budweiser, Bud Light and Michelob beers, accounts for roughly half of all beer sold in the United States. MillerCoors, which makes Miller Lite, Coors Light and Blue Moon, racks up more than a quarter of American beer sales.

D.G. Yuengling & Sons, makers of Yuengling Lager, is the largest American-owned brewery and accounts for about 2 percent of beer sales. Yuengling is just ahead of Boston Beer Co., makers of Samuel Adams beers.

In a revamped liquor market, the question of shelf space could be even more important to the state’s smaller breweries, such as Troegs, ABC, Stoudt’s Brewing Co. in Lancaster County and Victory Brewing Co. in Downingtown, All are members of the Brewers of Pennsylvania.

The state’s microbreweries rely on distributors to reach customers. If distributors have to clear shelf space for wine and spirits, smaller microbrews could be the casualties.

Corbett and Republican lawmakers who have pushed for privatization have insisted that privatization would lead to bigger business. They argue that the private industry would do a better job selling beer and wine and they contend that it’s time to get the state government out of the liquor business.

Pennsylvania’s business advocates, including the Pennsylvania Chamber of Business and Industry, strongly support privatization. They argue it will lead to more choices and convenience for customers.

Under the bill, beer distributors would get first crack at 1,200 wine and spirit licenses. After a 12-month period, the licenses would go up for grabs to the general public.

Beer distributors would also be able to sell beer by the six-pack and in growlers.

Here's the full content of the brewers' letter opposing the legislation, dubbed House Bill 790.

We write to express our collective concerns with the most recent version of House Bill 790, which is detrimental to the beer industry.

House Bill 790 would result in the beer segment losing as much as 50 percent of the floor and shelf space within beer distributorships, which account for more than two-thirds of our sales within Pennsylvania.

It also would establish hundreds of new “Wine and Spirits” outlets where only their products would be sold.

Further, House Bill 790 would authorize over 11,000 new outlets for the sale of up to 6 bottles of wine “to go”, including restaurants in supermarkets.

It also would create approximately 800 new “Grocery Store” licenses authorizing the sale of unlimited amounts of wine anywhere in a grocery store and, thereby, creating a very uneven playing field in the grocery store segment. And because it pertains only to wine, there will be supermarkets where wine will be the exclusive alcohol beverage option and no beer will be sold.

Even in those supermarkets which have a restaurant license and thus are permitted to sell a limited amount of beer, the Bill allows for unlimited wine sales and for wine to be located anywhere in the store. Meanwhile, beer is relegated solely to the restaurant section and sales are limited to a maximum of a case equivalent per transaction. Additionally, in order to even sell beer, a grocery store must incur the ongoing expense of operating a restaurant - - thus giving the grocery store another reason to consider opting to choose a “G” license which would permit it to sell unlimited amounts of wine from anywhere in the store and not have to maintain a separate restaurant facility.

To provide unlimited wine and liquor sales within distributors, unlimited wine sales within “G” licensed grocery stores, and limited takeout wine sales in restaurants and hotels while severely restricting beer sales in those same locations is not what the consumer expects or wants, nor is it fair to the tens of thousands of Pennsylvanians employed by the State’s beer industry.

The Bill also would change the law governing the use of credit cards by licensees to purchase beer. Such a change would have the indirect effect of adding an additional cost to the system that eventually would have to be borne by the consumer.

We ask you to oppose House Bill 790 in its current form and urge the House to consider changes to treat the beer industry fairly. We look forward to working with you to address these serious concerns.

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